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Leading a Business Transformation: Charles Holley, CFO-in-Residence

Charles Holley, retired CFO of Walmart, shares key steps, challenges and considerations in leading a strategic ‘reset’ as a CFO.

Charles Holley

The combination of disruption to organizations’ business models and the low-growth economy requires CFOs today to be capable of leading efforts to change strategic direction—in a sense, to hit the reset button. That sometimes also requires recognizing that something about the strategic vision you may have helped shape is broken or no longer working, and, of course, hard work. Still, leading a business or strategic transformation is likely to be one of the most satisfying experiences of any CFO’s career.

My own experience in hitting the reset button to lead a major transformation and strategic shift came toward the end of my CFO career. One of the areas I was responsible for as CFO was corporate strategy and development, while the company was working to refine its strategy. The efforts, however, were producing incremental improvement, not enough when the world was changing much faster and more dramatically. It became clear that the company needed to respond to that disruption with some disruption of its own to both the overarching strategy and business model.

I knew it was important to understand the current trends in consumer behavior in our markets, where they were going and how that would impact the business. Digging into the data made me realize how profoundly our marketplace had been changing. It was clear to me as well as my CEO that changes to the strategy were needed in order to adapt to how customers wanted to shop. It was also clear that the shift would require significant investments and major changes in how we operated—with no guarantees of success. But despite some challenges and the risk of failures, there was general agreement that the business had to make a move or risk being left behind.

The next step was forming an executive committee with some of the most senior leaders and others in key positions throughout the business to hash out how to reposition the business to address changes in customer preferences and behaviors, new technologies and competitors. I also hired a strategist to help us design and develop the framework that would guide and govern the strategic process. I made sure that person had access to everybody, especially the business leaders.

It took 18 hard months to nail down where we were as a business, where we wanted to get to and how we were going to get there. But at the end of that process we had a go-forward strategy and operational plan that included how much we wanted to spend, how to alter our business model, which businesses to build up and who would lead those efforts, and which parts of our portfolio to de-emphasize or cut.

Looking back over that process, several lessons stand out for me on how a CFO might lead an effective and sustainable business transformation:

—Adopt a change-agent mindset. Leading a transformational effort as a CFO requires getting out of your comfort zone as a cost manager. Transformational or strategic shifts can require sizable investments and sacrificing profit in the near-term for long-term results that could take years to show up on the balance sheet. It’s not about how to manage cost better, grow incrementally or improve margins, but rather how to reshape the strategic vision to stay relevant to customers and the market.

—Dig into the data. Look at the historical data and do the analysis to identify trends that are impacting the business and where they are headed. You likely will need strategists, people who really understand how to translate that data into insights that inform what the business needs to do. Just as with any talent issue, the CFO’s job as a leader isn’t to be the strategic expert; it’s to ensure there is a sound strategic process and talent that can produce the strategic plan.

—Don’t hesitate to force the issue if necessary. Generally, CFOs don’t like to be the bull in a china shop, but driving a strategic pivot that takes a company in a new direction requires courage, discipline and determination to keep it on course. Doing that means leveraging finance to collect and analyze the right data needed to make objective, fact-based decisions, and then using the CFO’s command of that objective data, ability to influence and business partnering skills to get buy-in from other leaders.

—Determine what you are going to stop doing. Just as important as identifying what you are going to do to shift and drive the strategy is deciding what businesses to exit or sell. That entails very tough decisions that are likely to stir up lots of emotions. You may have to sell off businesses the company has had for decades and brought great success in the past in order to put resources into new businesses that are not guaranteed to succeed.

—Empower change-agents and replace anti-bodies to change. Organizations develop antibodies to change and inevitably include people who resist change. As a transformational CFO, it’s critical to have people on the team, especially at the leadership level, who embrace change and can help you lead the charge. Otherwise, resistance to change can slow or undermine efforts to implement the new strategy.

—Don’t wait for perfection. Strategies are rarely perfect, and business can’t wait for perfection. What’s important is to get started, stick to a plan and keep moving forward, understanding that there will be missteps and even failures along the way. You can, and should, continuously reassess and fine-tune the strategy, drawing on new information and experiences.

—Be disciplined with strategic investments. As CFO, you need to understand the difference between what constitutes innovating and appropriate risk-taking versus chasing after the “nice shiny balls”—the projects, businesses or acquisitions that might look impressive and might even please investors in the short-term, but that don’t truly fit the strategy. That’s why it’s critical to put in place a process to continuously evaluate and measure progress on implementing the strategy, along with a governance framework to ensure accountability and transparency.

Finally, although changes may seem incredibly hard to push forward, stay focused and transparent about why they are necessary. At the same time, listen hard to others’ ideas and perspectives, even if you don’t ultimately take their suggestions. And enjoy the process and learn from it.

Charles Holley, retired CFO of Walmart, serves as an independent senior advisor to Deloitte LLP and as CFO-in-Residence of the CFO Program, providing guidance and counsel to staff, clients and senior leadership. He also serves on the Board of Directors of Amgen, the Dean’s Advisory Board for the McCombs School of Business at the University of Texas at Austin and the University of Texas Presidents’ Development Board, as well as the University of Texas system Chancellor’s Council.

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